Amid Growing Wealth, Nepotism and Nationalism in Kazakhstan

By ANDREW E. KRAMER; Floyd Norris, whose column normally appears on this page, is on vacation.

Published: December 23, 2005

A few years ago, the youngest daughter of Kazakhstan's president visited the Luxor temples in Egypt. Like many tourists, she later told an interviewer, she left deeply impressed with the site.

Unlike other tourists, Aliya N. Nazarbayeva, the daughter, returned home and arranged to build her own Egyptian temple -- a spa complete with hieroglyphics on the walls and statues of sphinxes and gods -- on a hill overlooking Almaty, Kazakhstan's largest city.

''Our host, Aliya, wanted guests to feel the same admiration she felt for the temples,'' said Nadezhda S. Bezverkhova, a deputy manager here at the Luxor spa and club, running her hand over a plush leather couch in the lobby.

The building of the Luxor, which opened in March, tells a lot about how business is done these days in this former Soviet republic, a swath of arid steppe between Russia and China that is endowed with vast oil reserves. Fueled with growing wealth from energy exports, Kazakhstan's economy reflects an intermingling of politics and business, widespread corruption and -- perhaps more than in any oil state outside the Middle East -- a prominent role for members of the president's family.

''The president's family has a lot of clout,'' said Bryan D. Stirewalt, a former adviser to the National Bank. ''Getting into any business, you had to have their permission.''

President Nursultan A. Nazarbayev, who has ruled Kazakhstan since 1989, won another seven-year term with 91 percent of the vote earlier this month in elections that international observers called unfair.

The country may be remote, but the policies of Mr. Nazarbayev, who is currently in the good graces of Washington for having surrendered Soviet nuclear weapons immediately after gaining independence, are of mounting concern to a world parched for petroleum.

Kazakhstan holds two-thirds of the crude reserves in the Caspian Sea region. The country exports a million barrels of oil a day and plans to triple output within 10 years as the Kashagan field comes online. Exxon Mobil, Chevron and the oil services firm Halliburton are active in Kazakhstan.

Kazakhstan's blend of nepotism, nationalism and oil wealth follows in the tradition of many countries in their early years of petroleum wealth.

In the early decades of the 20th century, Juan Vicente G?, a dictator who ruled oil-rich Venezuela for 27 years, personally enriched himself with the help of his extended family. The government was so inbred and violent that his brother, the vice president, was killed by a member of his own family in a power struggle.

The Saudi royal family, now including about 7,000 princes, has had a lock on oil since production picked up there after World War II. And after the breakup of the Soviet Union, the ruling Aliyev family in Azerbaijan, across the Caspian Sea from Kazakhstan, has controlled the government and the flow of oil there.

Ilham Aliyev succeeded his father, Heydar Aliyev, as president in 2003.

But some Western oil executives worry that a creeping nationalization is under way in Kazakhstan -- similar to what is taking place in Russia, where the Kremlin in the past year has gained control of two large oil companies.

Asked about the family's business connections, Karim K. Massimov, an aide to the president, emphasized that no Kazakh laws had been broken and argued that the country's economy was evolving after decades of Communist rule.

Under Kazakh law, the state oil company, KazMunaiGaz, has a pre-emptive right to buy oil fields. That right was asserted during the sale this fall of PetroKazakhstan, a Canadian-owned company, to the China National Petroleum Corporation, the biggest oil deal in Kazakhstan this year.

The deal was only approved after the Chinese concern agreed to sell assets, including a refinery, to KazMunaiGaz, where the vice president was, until recently, Timur Kulibayev.

Mr. Kulibayev is married to Dinara N. Nazarbayeva, another of the president's daughters. Mr. Kulibayev resigned from KazMunaiGaz during the presidential campaign this fall.

Marriage has been a means to extend the empire. Aliya Nazarbayeva, a slender woman who sometimes dyes her black hair blond, married Aidar Akayev, the eldest son of the former president of neighboring Kyrgyzstan in 1998, when she was 18. Commentators called it the first dynastic marriage between Central Asia's ruling families.

They have since divorced, though, and Kyrgyzstan's president, Askar Akayev, was deposed in a popular uprising in March.

But Aliya still wields influence over the construction business through her company, Elitstroi, according to a report by Moscow's Aton brokerage house.

The nepotism extends even further. Aliya's eldest sister, Dariga N. Nazarbayeva, and brother-in-law, Rakhat Aliyev, Kazakhstan's deputy foreign minister, control a media empire, according to the Aton report. Dariga is said to have left active business when she became a member of Parliament in 2004; some analysts here say she is being groomed in politics as a successor to her father.

The true reach of the family's business interests are unclear, however, because ownership is often not transparent in Kazakhstan. ''You'll rarely find the family on a share certificate,'' said Mr. Stirewalt, the former bank adviser.